New reforms protect firms that expose unfair actions

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New reforms protect firms that expose unfair actions

Companies that retaliate against whistleblowers who report their unfair business practices will be shown no mercy by the Fair Trade Commission.

The antitrust agency said on Thursday that companies that take reprisals against suppliers and business partners that report their actions to authorities or cooperated in an investigation, will face serious consequences.

The commission made a preliminary announcement on a reform bill that will prevent any actions taken against whistleblowers. The government is accepting public consensus on the reform bill, including public hearings, for 40 days until July 5.

Under the reform bill the penalty points levied on companies that have been reported to the prosecutors’ office regarding any retaliatory action against suppliers and business partners will be raised from the current 3 points to 5.1 points. When the accumulated penalty points exceed 5 points the company is banned from participating in public project bids.

Retaliation actions includes reporting any violation committed by the suppliers or requesting the government mediate disputes with suppliers, cutting off businesses with suppliers that cooperated with an FTC’s investigation, reducing supplies from the smaller businesses thereby affecting businesses’ earnings.

The antitrust agency said such action not only limits the business opportunities of small businesses but also could drive them out of the market.

The reform bill also includes exempting the mandatory payment guarantee when the main contractor pays subcontractors through a regular system. This will likely reduce the financial burden on the main contractor and provide more work to the subcontractor.

Additionally the main contractor will have their penalty points reduced 0.5 points when they are directly involved in the payments made to the subcontractors.

The FTC has also improved on the ambiguous and broad definition of technology data. Under the reform bill, technology data is information that is valuable in sales and production activities and has independent economic values. These include floor plans and work processes.

Earlier this week a report from the Anti-Corruption and Civil Rights Commission said there have been 2,812 complaints from subcontractors in industries including construction and manufacturing, between January 2014 through March this year. More than 80 percent have been on complaints regarding payments on their services, with the construction industry leading with 63 percent.

The second-largest complaint was unfair treatment or demands from main contractors at 4.3 percent, followed by unfair cancellation of contracts and unfair contract terms.


BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]



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